1LectureFinancialSystem1f

1LectureFinancialSystem1f - 1 Financial System Money Market...

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Unformatted text preview: 1 Financial System Money Market Capital Market Financial Institutions 2 1.Overview of the Financial System Financial Mkts Banks , Insurance..etc Suppliers of funds Govt, Firms, Indiv., foreigners Demanders of funds $ Deposits $ Loans + Dealers Indirect Finance Indirect Direct finance Debt /Equity Money Mkt Capital Mkt Primary Mkt Secondary Mkt Organized Exch. OTC Secondary Security Primary Security Financial Ins. Finance Govt, Firms, Indiv., foreigners Banks security Borrowers security 3 Examples Loan from a bank Buy a share from your uncle Buy life insurance Indirect finance direct finance Indirect finance 4 2. Classification of Financial Ins A. Depository Institutions : raise money b y taking in deposits BOC Currency in Circulation Reserves Govt Sec Loans 5 Bank Caisse Populaire DD Savings Cash TD Loans Mortgages DD Savings TD Cash Loans Mtges Trust & Mtges DD TD Mtges 6 Classification of Banks Schedule II : Foreign bank subsidiaries- Take retail deposits and service mostly ethnic groups- Deposits are insured by CDIC Schedule I : Big 6 (Bank of MTL, Royal Bank, CIBC, TD, National Bank, Scotia) and others- domestic banks offer full range of financial services- Deposits are insured by CDIC Schedule III : Foreign Branches Dont accept deposits of less than $150,000 7 B. Contractual Savings : raise money by taking regular savings under specific contract Public Pension Funds Pension Fund Reserves (PFR) Bond Stock Private PF PFR Bond Stock 8 Life Insurance Life Policies Health Policies(dental, drugs.) Annuity Mtges Bond Stock Property & Casualty General Policies Bond Stock Shorter Maturity than life 9 C. Other Financial Institutions Finance Commercial Paper (CP) Bond Loan Venture Capital Shares Bond Stock of Start-up Bank, Private Investors 10 Dealers Loans Repurchase Agreement (Repo) Govt Sec. Commercial Paper(CP) Mutual Funds Shares Bond Stock 11 Money Mkt Funds shares Certificate Deposits (CD) T-Bills Banker Acceptances ..etc.. Public Financial Institutions : EDC, CMHC, CDIC 12 Banking Today= Full Service FI 13 Debt obligations with maturity 1 year Principal is generally secure Very liquid Issued in high denomination Dealers market 3. Money Market buy sell 14 A.Treasury Bills No coupon, issued at discount...
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1LectureFinancialSystem1f - 1 Financial System Money Market...

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